More Huawei Affiliates Added To Entity List

The U.S. Commerce Department has added 46 additional overseas affiliates of Chinese telecommunications technology manufacturer Huawei Technologies Co. Ltd. to the restrictive Entity List.

The Entity List, which is enforced by the Commerce Department's Bureau of Industry and Security (BIS), identifies entities believed to be involved in activities that pose a threat to U.S. national security and foreign policy.

The latest round of Huawei affiliates to be added to the Entity List, which includes some modifications to earlier listed affiliates, takes effect August 19, the department said. The Federal Register notice contains the names and country locations of the affected Huawei affiliates.

These additional Huawei affiliates to the Entity List span 25 countries: Argentina, Australia, Bahrain, Belarus, Belgium, Brazil, China, Costa Rica, Cuba, Denmark, France, India, Indonesia, Italy, Kazakhstan, Mexico, New Zealand, Panama, Portugal, Romania, Russia, South Africa, Sweden, Thailand and the United Kingdom.

The Commerce Department said there are now more than 100 persons or organizations on the Entity List with ties to Huawei Technologies.

The department first added Huawei Technologies and 68 of its overseas affiliates and subsidies to the Entity List on May 16 in response to a decision by the federal government's End-User Review Committee (ERC). The committee consists of representatives from the Commerce, State, Defense, Energy and Treasury departments who decide by a majority vote when and which entities to add to the Entity List.

The ERC made its determination to add Huawei Technologies to the Entity List based on the Chinese company's alleged violations of the International Emergency Economic Powers Act (IEEPA), as well as a District Court for the Eastern District of New York indictment that alleged the manufacturer violated U.S. sanctions by illegally exporting technology with U.S.-made components to Iran.

The committee said it added Huawei's overseas affiliates based on "reasonable cause" that the company might use them to evade the Entity List restrictions.

The Entity List does not preclude a U.S. company or organization from doing business with a listed entity, but it imposes additional license requirements and generally limits the availability to most license exceptions for exports, reexports and transfers to listed entities.

Realizing the crippling financial effect that Huawei Technologies' initial placement on the Entity List had on the U.S. semiconductor industry, which supplies hundreds of millions of dollars in components to the Chinese company each year, the Commerce Department on May 20 established a 90-day temporary general license (TGL) that allows U.S. exporters meeting certain regulatory conditions to continue conducting business with the Chinese company and the 68 overseas affiliates.

The conditions include continued operation of existing networks and equipment, support to handsets acquired before May 16, cybersecurity research and vulnerability disclosure, and "engagement as necessary for development of 5G standards by a duly recognized standards body."

BIS said the temporary general license does not relieve companies from other U.S. export control obligations related to China under the Export Administration Regulations (EAR).

Effective August 19, the Commerce Department will extend the temporary general license for Huawei Technologies and 68 overseas affiliates for another 90 days.

"The continuation of the TGL is intended to afford consumers across America the necessary time to transition away from Huawei equipment, given the persistent national security and foreign policy threat," the Commerce Department said in a press release.

"As we continue to urge consumers to transition away from Huawei's products, we recognize that more time is necessary to prevent any disruption," said Secretary of Commerce Wilbur Ross in a statement. "Simultaneously, we are constantly working at the department to ensure that any exports to Huawei and its affiliates do not violate the terms of the Entity Listing or temporary general license."

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